Rice could help curb food inflation fallout from war in Ukraine
Wheat price has jumped to all-time high as supplies cut from one of world's main breadbaskets
Russia’s invasion of Ukraine has delivered global disruption that is set to cascade through food supply chains and worsen hunger, but Asia’s love for rice could limit the fallout.
Rice is more popular with many Asian consumers than wheat, which has seen supplies cut from one of the world’s breadbaskets, said Jules Hugot, an economist at the Asian Development Bank.
Rice prices have been relatively stable, and it’s easy to swap one staple for the other, he said.
“These are sources of starch and there’s substitution between them,” said Hugot, though the price of rice, too, is rising.
Wheat has jumped to an all-time high, and rice is near the highest since May 2020.
Russia and Ukraine together account for a quarter of the global trade in wheat, used in everything from bread to pasta and livestock feed. The conflict shuttered ports in Ukraine and trade with Russia has been stifled by sanctions.
The elevated prices are accelerating food inflation across the world and raising concerns for countries reliant on foreign supply.
Asian buyers should be able to find alternatives for trade flows disrupted by the war, Hugot said, citing the examples of wheat from Kazakhstan and palm oil from southeast Asia to replace Black Sea shipments of sunflower oil.
“It is possible to diversify as these are homogeneous goods,” he said.
Food inflation is relatively contained in Asia, thanks to the popularity of rice and falling pork prices as China expands the world’s biggest hog herd. Supply chains have also become more resilient after the pandemic and countries are pursuing diversification to bolster food security, said Hugot.
Less clear is how long the disruptions will last. There are already expectations the invasion will deter Ukrainian spring planting of crops such as corn and sunflowers, extending the supply shock on the global market.
It’s also putting fresh pressure on skyrocketing fertiliser prices. India relies heavily on imports, and disruptions to trade flows from Russia — an important global producer for all major fertilisers — is bound to have a significant impact on the south Asian nation, he said.
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